Following the coalition government’s collapse, Germany is set to vote on 23 February. However, the election is unlikely to have a significant impact on global markets, opines State Street Global Advisors (SSGA). With mainstream parties struggling to form a majority, a centrist coalition is the most likely outcome, ensuring policy continuity, the asset manager believes.

“Intra-eurozone bond spreads could narrow (except in France) as Germany embarks on a modest fiscal easing, while the periphery should continue to outperform economically,” says Elliot Hentov, Head of Macro Policy Research at SSGA. “The exception could be equity performance as German corporates adapt to changing global market conditions even as the home market stagnates. The risk here is from weaker global demand based on US trade policy and China’s domestic economy.”

Read the full insight here.